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:: Step 1: Number of Contracts
Op 1:  $250 / ($1.20 x 100) = 2
Op 2:  $250 / ($2.35 x 100) = 1
Op 3:  $250 / ($2.35 x 100) = 1
Op 4:  $250 / ($1.75 x 100) = 1
Op 5:  $250 / ($5.10 x 100) = 0
Op 6:  $250 / ($3.20 x 100) = 0
 
:: Cautionary Note
If you were auto-trading the service and they had quoted a buy range of $1.10 to $1.30 for Option 1 to their broker, you may have only been able to purchase 1 contract - if the broker had taken the upper figure as the buy price, your purchasing capacity would have been calculated accordingly. Check with your broker.
 
:: Step 2: Outlay Per Option
Op 1:  $120 x 2 = $240.00
Op 2:  $235 x 1 = $235.00
Op 3:  $235 x 1 = $235.00
Op 4:  $175 x 1 = $175.00
 
:: Step 3: Gross Profit
Op 1:  $240 x 37.5% = $90.00
Op 2:  $235 x 57.4% = $134.89
Op 3:  $235 x 210.6% = $494.91
Op 4:  $175 x 71.4% = $124.95
Total   $664.75
 
:: Step 4: Net Profit/Loss
Gross Profit: $664.75
Brokerage: $119.60
Subscription Fee: $105.00
Net Profit: $440.15
 
:: Step 5: ROI
Net Profit: $440.15
Bank: $5,000
ROI: 8.8%

Puts/Calls
 

The three essential pieces of information you need to know to calculate your ROI for put/call strategies are:

  1. The price paid for the option

  2. Either the sale price of the option or the percentage return on the trade

  3. The date the trade was entered (which allows you calculate your returns on a monthly basis by knowing which trades to include for any particular month)

 
Stock Entry Option Buy Price Exit Sell Price
TWX 1-Oct Oct 17 C $1.20 10-Oct $0.75
PDC 4-Oct Nov 20 P $2.35 6-Oct $3.70
MNT 4-Oct Oct 55 P $2.35 12-Oct $7.30
AL 7-Oct Nov 30 C $1.75 18-Oct $3.00
AET 17-Oct Nov 80 C $5.10 20-Oct $7.50
OXY 17-Oct Nov 30 C $3.20 26-Oct $2.3
 
:: Step 1: Number of Contracts

Once you have this information, the first step in working out your ROI is to establish how many contracts you could have bought. We're going to be very conservative in this example and work with a bank of $5,000 risking 5% (or $250) per trade.

 

With this trading profile, you can see from the calculation box on the left how many contracts of each option you would have been able to purchase (and that for some, they would have been too expensive for you to trade).

 
:: Step 2: Outlay Per Option
Once we know the number of contracts you would have purchased for each trade recommendation, we can work out how much you would then have outlaid per option.
 
:: Step 3: Gross Profit
From the money invested we are now able to calculate how much you would have made per trade, based on the advisor's returns. These results are shown in the calculation box for Step 3 and give us your gross profit for the month.
 
:: Step 4: Net Profit/Loss
Out of that must come your brokerage and your monthly subscription fee. Your brokerage will be $14.95 on trades of 9 contracts or less for each leg of the trade (buying the contracts and then selling them). For each trade that is $29.90, making $119.60 in all.

And to simplify matters, we’ll assume that the subscription fee for the advisory service is $105/month (which is the average for all the services we track.)
 
:: Step 5: ROI
Now we’re in a position to work out your ROI for the month, which is done in by dividing your net profit by your original bank of $5,000. The result is 8.8%, which is very good considering the average Mean Monthly Return of the different advisory services currently stands at 5.5%.